Weekly News Highlights – 28 March 2024

Welcome to the latest in fintech news, where cutting-edge technologies and innovative financial solutions converge to reshape the landscape of banking, investing, and payments. Stay tuned as we explore the trends driving the future of finance!

Artificial Intelligence Act: MEPs adopt landmark law (European Parliament)

The Artificial Intelligence Act, recently approved by the European Parliament, introduces comprehensive regulations aimed at safeguarding fundamental rights, promoting innovation, and ensuring compliance with democratic principles. Key provisions include bans on certain AI applications such as biometric categorization and emotion recognition in workplaces and schools, along with restrictions on the use of biometric identification systems by law enforcement except in specific situations. High-risk AI systems will be subject to stringent obligations including risk assessment, transparency, and human oversight. Additionally, transparency requirements for AI models and measures to support innovation and SMEs are outlined. The Act, which emerged from citizens’ proposals, aims to establish Europe as a leader in AI while addressing societal concerns and ensuring human values remain central to AI development. Read more

Goldman closes GreenSky sale, and Synovus sees an edge (American Banker)

Goldman Sachs has completed the sale of GreenSky, a home improvement lending platform, as part of its strategy to scale back its consumer business. The sale to a consortium of investors including Sixth Street and KKR marks the end of Goldman’s ownership after just two years. Synovus Financial anticipates significant revenue growth from its collaboration with GreenSky, projecting between $20 million and $30 million in annual revenue from the partnership. Despite short-term challenges in the home improvement sector, experts expect a resurgence in spending by the end of 2024. This sale reflects the dynamic nature of the financial services industry and the importance of strategic partnerships for growth. Read more

Visa Bolsters Fraud Prevention Arsenal with Three New AI-Powered Solutions (QZ)

Visa has launched three new AI-powered risk and fraud prevention solutions to bolster security in digital payments. Integrated into the Visa Protect suite, these products aim to combat fraud in various payment scenarios, including card not present transactions and immediate account-to-account payments. The solutions include Visa Deep Authorisation (VDA) for CNP payments, an expansion of Visa Advanced Authorisation (VAA) and Visa Risk Manager (VRM) for non-Visa card payments, and real-time protection for account-to-account payments. These innovations leverage deep learning AI models to provide real-time risk scoring and enhance fraud detection capabilities. Visa emphasizes its commitment to security, having thwarted $40 billion in fraudulent activities in 2023. The new solutions will be available to clients starting in the first half of 2024, aiming to address the growing volume and sophistication of digital fraud. Read more

Robinhood launches credit card (FinExtra)

Robinhood has diversified its offerings beyond stock trading by launching a credit card, the Robinhood Gold Card, which offers perks such as three percent cashback. This move comes eight months after the company acquired credit card startup X1 for approximately $95 million. The card, available to Robinhood Gold members, has no annual fee, no foreign transaction fees, and provides cashback on all categories, with a higher rate for purchases made through the company’s travel portal. Robinhood Gold members, who currently exceed one million, pay a monthly or annual fee for access to various benefits. The card also allows users to create virtual cards for one-time purchases, add family members, and monitor spending through a dedicated app. Additionally, users who refer ten friends can receive a solid gold card as a reward. The acquisition of X1 brought a team focused on serving digital natives, using income instead of credit scores to determine credit limits. Read more

Clearcover launches GenAI insurance tool to expedite claims processing (Fintech Global)

Clearcover, a leading car insurance company, has launched a revolutionary Generative AI solution aimed at streamlining the insurance claims process and enhancing customer experience. This innovative product leverages advanced technology, including large language models (LLMs) and Clearcover’s proprietary machine learning technology, ClearAI®, to facilitate a conversational experience immediately following the First Notice of Loss (FNOL). The solution digitizes statement collection, expedites claim processing, and integrates seamlessly with Clearcover’s existing digital claims process, Clear Claims™. Clearcover aims to provide real-time customer support through conversational AI integration in its mobile app, with plans to extend this feature to its agent portal and website. CEO Kyle Nakatsuji and Chief Product and Innovation Officer Adam Fischer underscore the company’s commitment to leveraging technology to enhance the end-to-end insurance experience. Read more

+Simple acquires OM Suscripción to boost Spanish insurance market presence
(Fintech Global)

+Simple, a European insurance distribution platform, has acquired OM Suscripción de Riesgos, a Spanish underwriting agency specializing in surety insurance. OM holds a significant share of 15% in the Spanish surety insurance market, focusing on SMEs in construction. The acquisition aims to strengthen +Simple’s presence in Spain and expand its product range. Read more

Visa and Mastercard end long running US interchange fee battle (Payments Cards and Mobile)

Visa and Mastercard have reached a landmark settlement in the US, agreeing to cut interchange fees over the next five years. This move is expected to save merchants approximately $30 billion and resolves a nearly two-decade-long legal battle. The agreement also allows merchants to charge different prices based on the credit card used and includes a cap on interchange rates until 2030. Although merchants are not required to pass on savings to consumers, the settlement addresses concerns raised by small businesses. Visa North America President Kim Lawrence emphasized that the concessions were made without compromising safety, security, or innovation. Mastercard’s Chief Legal Officer Rob Beard stated that the agreement provides certainty and value to business owners. Read more

US penalizes Russian fintech firms that helped others evade sanctions (The Record)

The United States has imposed sanctions on 13 Russia-linked fintech companies and two individuals for facilitating cryptocurrency services used to evade economic restrictions imposed on Russia following its invasion of Ukraine. This action comes in response to Russia’s ban on 227 U.S. citizens for supporting what it calls “Washington’s Russophobic policies.” The sanctioned entities include firms accused of enabling potential sanctions evasion by providing blockchain-based services or facilitating virtual currency payments in the Russian financial sector. The sanctions block all property and interests of the designated entities in the U.S. and prohibit transactions with them. Additionally, the U.S. Treasury Department sanctioned two Russian nationals and two companies for their involvement in a disinformation campaign allegedly directed by the Russian Presidential Administration. Read more

UK fintech Railsr approaches Equals Group over potential merger (Fintech Futures)

UK-based fintech Embedded Finance, trading as Railsr, has approached Equals Group proposing a potential merger, as initially reported by Sky News. Equals Group confirmed receiving an indicative non-binding proposal from a consortium led by Embedded Finance Limited and TowerBrook Capital Partners. However, Equals stated that there is no certainty regarding any firm offer being made or its terms. According to UK takeover code regulations, Railsr must declare a definitive intention by April 17. Railsr’s turbulent year involved a rescue sale to a venture capital consortium and the appointment of new executives. Additionally, it secured $24 million in funding and appointed Lord Philip Hammond as its chair following the departure of Rick Haythornthwaite to NatWest Group. Read more

Paynetics Acquires Neobank Novus to Charge its ESG Mission (Fintech Magazine)

Paynetics, a leading embedded finance provider, has acquired Novus, the UK’s first ‘impact neobank,’ demonstrating its commitment to advancing environmental, social, and governance (ESG) goals in financial services. Novus has gained recognition for seamlessly integrating financial services with positive impact initiatives, allowing users to contribute to causes and track their carbon footprint. With Novus under its wing, Paynetics aims to enhance the neobank’s offerings and expand the ESG ecosystem across Europe. The acquisition aligns with Paynetics’ mission to accelerate businesses through innovation and create a future where clients can grow while making a positive impact. This move underscores Paynetics’ dedication to leveraging embedded finance for ESG initiatives in the financial services sector. Read more

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